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Brett Arends' ROI
Oct. 19, 2010, 12:01 a.m. EDT
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America still hemorrhaging jobs
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Happy 23rd anniversary of the 1987 crash
By Brett Arends
BOSTON (MarketWatch) "” Will anyone even bother voting in future elections? Will they get involved in political causes? Will they spend one dime of their savings supporting a political candidate or a campaign?
When you look at what is happening with money and politics in 2010, these are not idle questions.
Thanks to changes in the law, company honchos can now buy an election as easily as they order office furniture. The president has tried to make an issue of this in the past 10 days, but I suspect his commentary will have little effect.
Alan Murray and Jerry Seib discuss whether the Obama administration's pressure on the U.S. Chamber of Commerce to discuss its sources of campaign funds has backfired.
In case you missed it, recent Supreme Court rulings mean that corporations can now effectively spend freely on political campaigns, including during elections. Loopholes in the tax code, particularly pertaining to 501(c)4 nonprofits, mean they can do so secretly through anonymous front groups.
It doesn't matter whether you are a Republican or a Democrat, whether you hate the president or like him.
Under this system, the game is over. Our democracy is dead. We just don't know it yet.
Don't believe me? Look at the numbers.
Up until now, the gold standard for campaign fund-raising was set by Barack Obama in 2008. With brilliant creativity and energy, his team harnessed the Internet, and combined it with on-the-ground logistics to tap sources of funds from big cities and little towns all across the country. In the end, 320,000 individual donors sent in money, a remarkable achievement. About 200,000 of them gave less than $1,000. The total raised by the campaign was $750 million.
At the time it was considered the wave of the future "” the utopian marriage of grassroots democracy and technology. How naïve that looks. It's already a period piece.
Compared with the financial firepower in the hands of major corporations, that amount of money is chicken feed. Many CEOs can cut checks for millions, even tens of millions, without blinking. They can match all that effort without breaking a sweat.
A chief executive could match the most successful grassroots, populist fund-raising campaign in history with a single phone call.
According to data from FactSet, there are around 350 companies on the U.S. stock market that have more than $750 million on hand just in cash and equivalents, such as short-term Treasury bills.
Exxon Mobil Corp. /quotes/comstock/13*!xom/quotes/nls/xom (XOM 64.86, -1.42, -2.15%) has $13.3 billion in ready money. That's 18 times as much as Obama raised in all of 2007-08. Johnson & Johnson /quotes/comstock/13*!jnj/quotes/nls/jnj (JNJ 62.98, -0.88, -1.37%) has $12.7 billion. UnitedHealth Group Inc. /quotes/comstock/13*!unh/quotes/nls/unh (UNH 35.15, -1.10, -3.03%) has about $10 billion. The list goes on.
In other words, under the new law, the chief executive of any of these companies could match the most successful grassroots, populist fund-raising campaign in history with a single phone call.
That understates the issue; only a small percentage of a company's true wealth is tied up in ready cash. Exxon Mobil, the biggest company, is valued at more than $330 billion. So $750 million is just one quarter of 1% of its value. A quarter of one percent. Who notices a 0.25% movement in a stock price? Annual cash flow runs to tens of billions of dollars a year.
Brett Arends is an award-winning financial columnist with many years experience writing about markets, economics and personal finance in Europe and the U.S. He has received an individual award from the Society of American Business Editors and Writers for his financial writing, and was part of the Boston Herald team that won two others. He was educated at Cambridge and Oxford Universities, and has worked as an analyst at McKinsey & Co. He is a Chartered Financial Consultant (ChFC) and Accredited Asset Management Specialist (AAMS). His latest book, "Storm Proof Your Money," has just been published by John Wiley & Co.
Twenty-three years ago today, the stock market crashed "” falling 22.6% in a single session. If a drop of similar magnitude were to occur today, the Dow would lose nearly 2,500 points. There are many lessons to learn from that experience.
10:40 a.m. Today10:40 a.m. Oct. 19, 2010 | Comments: 47
- GrumpyOldCuss | 2:37 a.m. Today2:37 a.m. Oct. 19, 2010
"Death of a democracy http://on.mktw.net/cijzCu" 11:41 p.m. EDT, Oct. 18, 2010 from MKTWArends
"America still hemorrhaging jobs http://on.mktw.net/9NOQPg" 11:19 p.m. EDT, Oct. 10, 2010 from MKTWArends
""?Best-of' city-lists don't always pass the test http://on.mktw.net/9p2EiR" 5:54 p.m. EDT, Oct. 5, 2010 from MKTWArends
"The real meaning of the foreclosure scandal http://on.mktw.net/cS0Cb5" 11:41 p.m. EDT, Oct. 4, 2010 from MKTWArends
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